Health Care Organizations: Checklist and Illustrative Financial Statements

This financial accounting and reporting practice aid is invaluable to anyone who prepares financial statements and reports for health care organizations. The checklists have been updated to reflect AICPA and FASB pronouncements and interpretations issued as of September 30, 2008. These checklists can be used by preparers of health care organization financial statements prepared in conformity with generally accepted accounting principles and by practitioners who audit or compile those financial statements as they evaluate the adequacy of disclosures made in the basic financial statements and notes to the financial statements. Illustrative financial statements and auditor's reports are included in this practice aid.

The checklist section of the publication covers new accounting pronouncements issued as of September 30, 2008 having disclosure related requirements including:

• SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement
  No. 133
• Multiple new SAS interpretations related to financial statements prepared in accordance with International Financial Reporting Standards, and financial statements audited in accordance with International Auditing Standards

This nonauthoritative practice aid has been prepared by the AICPA staff and has not been reviewed, approved, disapproved, or otherwise acted on by any senior technical committee of the AICPA and do not represent official positions or pronouncements of the AICPA.

Description

    .01 Health care organizations may be classified by sponsorship or legal structure within the following broad categories:

• Not-for-profit business-oriented: These are essentially self-sustaining from fees charged for goods and services. The fees charged by such organizations generally are intended to help the organization maintain its self-sustaining status rather than to maximize profits for the owner's benefit. Such organizations often are exempt from federal income taxes and may receive contributions of relatively small amounts from resource providers that do not expect commensurate or proportionate pecuniary returns.
• Not-for-profit nonbusiness-oriented: These are voluntary health and welfare organizations as defined in Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. Such organizations are within the scope of AICPA Audit and Accounting Guide Not-for-Profit Organizations, rather than that of Audit and Accounting Guide Health Care Organizations.
• Governmental: Often called public health care entities, the entities are owned and operated by federal, state, city, or county governments or other political subdivisions. Investor- (or operator-) owned: These organizations operate as stock corporations, partnerships, or sole proprietorships.

    .02 Health care organizations include, but are not limited to, the following:

• Clinics, medical group practices, individual practitioners and practice associations, and other ambulatory care organizations
• Continuing care retirement communities
• Health maintenance organizations and similar prepaid health care plans
• Home health agencies
• Hospitals
• Nursing homes that provide skilled, intermediate, and less intensive levels of health car
• Parent companies, holding companies, and other organizations that primarily plan, organize, and oversee health care services

Applicability of These Checklists

    .03 These checklists, and the illustrative financial statements included herein, follow the guidance contained in the AICPA Audit and Accounting Guide Health Care Organizations (with conforming changes as of May 1, 2008), referred to as the guide. These checklists and illustrative financial statements should be used for not-for-profit business-oriented and investor-owned health care organizations. These checklists do not apply to not-for-profit nonbusiness-oriented health care organizations. For these types of organizations, follow the guidance in the AICPA Audit and Accounting Guide Not-for-Profit Organizations and the AICPA's disclosure checklist titled Not-for-Profit Organizations.

    .04 Not-for-profit health care providers that receive federal financial assistance may be required to have an audit conducted in accordance with Office of Management and Budget (OMB) Circular A-133 Audits of States, Local Governments, and Non-Profit Organizations. FSP section 11,400 includes guidance for auditors' reports for audits performed under OMB Circular A-133.

    .05 Although the guide also applies to state and local government-owned health care providers, these checklists do not include disclosures or sample financial statements of government-owned providers. Chapter 1 of the guide discusses the application of generally accepted accounting principles (GAAP) to governmental health care providers.

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